Dead-end trade policy

Here’s a state­ment from the Japan­ese for­eign min­istry about the stalled nego­ti­a­tions of a free trade agree­ment with Mex­i­co: bq. “Agri­cul­ture is the stick­ing point. If the two sides can agree on this, then it’s rel­a­tive­ly easy for both Japan and Mex­i­co to reach a sub­stan­tial final agree­ment,” sai­da spokesman for Japan’s for­eign min­istry. (“Finan­cial Times”:http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1073281202823&p=1012571727102) The Japan­ese Prime Min­is­ter, Koizu­mi, declined to pur­sue a nego­ti­a­tion of a free trade agree­ment with Aus­tr­lalia ear­ly in 2003—although it had been pro­posed by his own For­eign Min­istry and endorsed by busi­ness groups on both sides—because he accept­ed the advice of the Japan­ese indus­try Min­istry (MITI) that an agree­ment with Mex­i­co (a NAFTA part­ner) was a pri­or­i­ty for Japan. He also feared that Japan would not be able to agree to open its food mar­kets to import com­pe­ti­tion from Aus­tralia. bq. Fail­ure to reach agree­ment with Mex­i­co after more than a year of talks has been a blow to Japan’s hopes of secur­ing its first eco­nom­ic part­ner­ship agree­ment that includes agri­cul­ture. Japan’s only EPA is with Sin­ga­pore, where agri­cul­ture is not a trade issue. (FT) Here’s a fear­less pre­dic­tion. One day, soon­er or lat­er, the Japan­ese will aban­don their unswerv­ing pol­i­cy of pro­tect­ing Japan­ese food pro­duc­ers and allow the inevitable adjust­ment to take place. Prob­a­bly it will be a local event that wakes them up: the sig­nif­i­cant­ly greater suc­cess of a more open Chi­nese econ­o­my. But by then …

Peter Gallagher

Peter Gallagher is student of piano and photography. He was formerly a senior trade official of the Australian government. For some years after leaving government, he consulted to international organizations, governments and business groups on trade and public policy.

He teaches graduate classes at the University of Adelaide on trade research methods and the role of firms in trade and growth and tweets trade (and other) stuff from @pwgallagher